Marks and Spencer reports flat food performance in Q3

ByGemma McKenna

Published: 08 January, 2015

Marks and Spencer grew food sales 17% in Christmas week, but analysts were unimpressed by its flat food performance in Q3.

Its third quarter results, for the 13 weeks to December 27, 2014, show a 0.1% like-for-like sales increase in food, with Christmas week being the stand-out performer. Lfls were below market expectations of at least a 1% uplift.

Marks & Spencer’s food was the stand-out performer in Q3, but sales were still lacklustreMarks & Spencer’s wine range is widely praised by experts, and won a slew of awards in teh recent first round of the International Wine Challenge 2015.

Overall it said sales were up 2.8% and that new stores were performing well and its store opening programme was on track.

Elsewhere the retailer struggle on its general merchandise with like-for-like sales down 5.8% - it said its clothing range was negatively impacted by warm weather in October and November, while disruption at its Castle Donington distribution centre affected December and its online sales.

Chief executive Marc Bolland said: "M&S had a very good Christmas in food. We delivered record Christmas sales, strongly outperforming the market. We had a difficult quarter in general Merchandise, dominated by unseasonal conditions and an unsatisfactory performance in our e-commerce distribution centre."

Independent retail analyst Nick Bubb tweeted: "Awful M&S sales figures, with Food only flat LFL and Non-Food nearly 6% down LFL in Q3 but cost-cutting has saved them from a profit warning."

Canaccord retail analysts David Jeary and Mark Photiades, said: "Our neutral view on M&S remains unchanged on the back of yet another curate's egg of an update. The food business remains the star performer, and has thus far managed not to be dragged into the grocery price battle."

Neil Saunders, head of retail research consultancy Conlumino, said amid disappointing online figures, that M&S was "probably better off not having the headache of an expensive online service". "However, in our view, M&S's food offer is strong enough that it does not necessarily need an online offer to be successful - people will willingly come to stores to buy. This is evidenced in the latest set of numbers where M&S has, once again, outperformed a very tough market even if like-for-likes were anaemic."

Marks and Spencer's wine selection is frequently praised - its own brand wine range has recently won a host of awards - at the first phase of the International Wine Challenge 2015, it took home 69 medals and outpacing nearest rival Tesco by 37 medals.

It won gold medals for wines from France, Germany, Italy, Portugal and Spain, demonstrating the power in the supermarket's European wine buying team.